Just as in life, in business we make decisions every day; form the unimportant to the monumental.  In personal life, these decisions are made for a variety of reasons, and many different things are used as a guide.  In business, it is the same, although perhaps it should not be.  To make such decisions, simple ROI (return on investment) calculations should drive your decision making as a business leader.  However, as we have learned, more than the facts of the situation affect reasoning.  Many other things come into paly, such as relationships, potential fallout from a decision, ego, greed, anger, and many other emotions.  Risk aversion, the inability to correctly predict the emotional outcome, the way a problem is worded, incidental emotions, and framing can all influence decisions (Goldstein, pp. 378-380).

            Recently, I used the framing effect to change the outcome of a business decision at my company.  As a director, there are very few things that I need to have someone “higher up” approve, but one of those things is our annual contract with our customers.  I knew the program I wanted to present would be a huge success for our company. In the first year, I knew we would see tremendous revenue growth, with only a slight improvement in their program payouts (a hit to our profit).  In year two, the added payouts would be gone and we would continue to see revenue increases.  For me, this two year focus was what we needed, not a focus on short term profits.  A simple ROI calculation showed my point.  However, our executive would need to justify their decision to our board, and I believe this was something they did not want to take on. The potential hit to our profit in year-one was the only thing our executive focused on.  However, I knew that if we did not go with the program I wanted to present, not only would we lose out on the potential growth, but that we risked a significant portion of our business with this customer.  From all the calculations I did, we were putting roughly three million dollars at risk. 

            After several meetings, the executive’s position did not change.  What I needed to do was to change the way I was framing the issue because “one reason people’s decisions are affected by framing is that the way a problem is stated can highlight some features of the situation and deemphasize others” (Goldstein, p. 381). What I came to realize was that I was highlighting the wrong elements of the program with our executive.  In all my meetings, I had focused on the potential revenue that would be generated by my deal.  While I did discuss the risk, it was certainly an afterthought in terms of the other talking points.  I realized I needed to change the focus of my argument or I would be in for a rough year.

What I did has been validated by Tversky and Kahneman, and that is when a choice is framed in terms of gains, people use a risk aversion strategy, and when a choice is framed in terms of losses, people use a risk taking strategy (Goldstein, p.380).  By changing the focus to the business we would lose, the executive was now onboard and willing to take the risk of my program. 

            I’m happy to say that my decision has paid off, and through the end of the first quarter, not only have we seen double-digit revenue growth, but also our profit is on target as a result of our customer selling a better mix of product.

Goldstein, B. E. (2011). Cognitive Psychology (Third Edition ed.). Belmont, CA, USA: Wadsworth.

When one is going to give a presentation to a large group, two challenges usually face the presenter: the need to remember the contents of the presentation, and then the challenge of making the presentation impactful and memorable for the audience.  After all, you want the audience to remember your presentation afterwards.  

I recently faced this situation myself at my company’s National Sales Meeting (NSM).  During the meeting, I was to give two presentations.  One was to be 90 minutes in length and would focus on product training.  I would present this 6 times over the five-day period.  The second presentation was to focus on our Key Accounts and the annual sales plan.  This presentation was to be 45-60 minutes, which I would present this twice over the five-day period. 

My first task was to be sure that I would remember the entire content of the presentation.  90 minutes is a long time, with a lot of information to cover.  To do so, I used Elaborative Rehearsal, where I thought about the meaning of the presentation sections and connected them to something I already knew.  (Goldstein, p. 173)  This occurred during the many times I rehearsed my presentation.  One of the things I have always done when preparing to give a presentation is to practice in front of a mirror.  I actually walk through my entire presentation, practicing out loud to myself.  This type of practice is known as generation, and it has been shown that talking out loud helps create strong encoding and good long-term retrieval (Goldstein, p. 188).  My own experience certainly backs this research.

My second challenge was to be sure that my audience walked away remembering my key messages.  First, I was sure to organize my material in a way that was logical and grouped together in a common sense way.  “Organizing material to be remembered results in substantially better recall” (Goldstein, p.179).  I always begin each presentation by telling them the main themes, and showing them an agenda on how the presentation is organized.  This helps give them a mental image of the organizational structure of my presentation. 

Secondly, I made sure that I used stories and linked my information to things that I knew would be meaningful and impactful to them.  For example, I used the story of a large resort in Florida to emphasize how they should interact with certain sales reps and how this would lead to the generation of more income for them.  The sales representative that was involved in this deal was in the room, so it helped to show the audience the individual.  They were actually able to see the person I was referring to.  I tried to weave several stories into my presentation, because memory is “superior when a meaningful connection has been made between and item and something else” (Goldstein, p.174).  In addition, telling stories helps break the monotony of a presentation and draws their attention.  The more attention the audience has, the better the chance of the presentation being impactful.

Finally, I ended my presentations with a Frequently Asked Questions section to test their knowledge and to reinforce my main themes.  I always do this as a recap because it gets the audience involved,.  As Goldstein noted, “being tested on the material to be remembered results in better memory” (Goldstein, p. 180).

In sum, I have been using these methods without really knowing the reason as to why these methods work.  After learning how long-term memory, encoding, and retrieval works, I have learned some areas that I could perhaps use to my advantage in my presentations.  I have seen success in my presentations, and I feel that the knowledge I now possess will take the to another level.

Goldstein, Bruce.  Cognitive Psychology: Connecting Mind, Research, and Everyday Experience.  3rd Edition. Wadsworh Cengage Learning.

“The woman described as having a bubbly personality now struggles to drink from a straw. A portion of her brain was removed to alleviate swelling after the brutal attack left her with a smashed skull.” This quote form an article in Huffington Post describes life for a now 27 year old from Ireland.  The former exchange student was living and attending school in Chicago when her life was suddenly altered in a horrific attack by a bat-wielding assailant.  The attacker is now serving life in prison, but the exchange student’s life, and that of her family, has been forever altered. Localization or the notion that certain modules of the brain control specific functions is the reason that the student has cognition, but cannot speak nor perform other daily tasks.  While research has since evolved from this basic notion, it nevertheless remains a basic principle in brain functioning.

The life-altering effect of this attack shows how life can change in an instant, and that damage to the human brain can have devastating consequences.  In this particular case, the young woman’s brain was injured, she had a portion of her brain removed, and certain aspects of her life have forever changed.  While she cannot remember the attack, she can no longer speak, and cannot walk or feed herself.  However, she does understand the world around her. This is because localization, the idea those specific functions are served by specific areas of the brain (Goldstein, p.29).

Studies of battlefield and stroke victims initially identified areas of the brain that serve specific sensory functions (Goldstein, p.30). In the 1860s, Paul Broca pioneered localization studies because he noticed that stroke patients understood what people were saying, but could not express themselves. This condition is now called Broca’s aphasia (Goldstein, p.33). In an effort to understand this, Broca conducted autopsies on stroke patients and discovered that an area of the frontal lobe was responsible for producing language. This area has been called Broca’s area (Goldstein, p. 33).  Individuals that underwent trauma to these areas of the brain could understand what people said, but couldn’t express themselves (Goldstein, p.33).

In the 1970s, new information and research was conducted on language processing and the brain that challenged Broca’s findings (Goldstein, p.34).  This new research showed that patients had difficulty understanding language.  This was a result of problems in form and meaning. Patients could understand certain sentences that were straightforward, but could not understand others that had more complex meaning (Goldstein, p.34). This does not discredit Broca’s findings; rather the idea has been taken further with the notion of distributed processing which states that many different areas of the brain combine to produce specific functions (Goldstein, p.36).

An understanding of the brain today shows that distributed processing plays a much greater role in specific functions than championed by Broca (Goldstein, p.36).   We now know that many different areas of the brain combine to produce specific functions; however, we cannot ignore Broca’s findings and general thesis.  The example of the exchange student illustrates the basic fact that there are modules, which when damaged or altered, cause the loss of specific functions.  Whether it is due to localization, or multiple areas under distributed processing that were damaged, the exchange student will have to live with the results.

Sources:

http://www.huffingtonpost.com/2013/10/14/bucktown-bat-beating-tria_n_4097194.html

Goldstein, B. (2011). Cognitive Psychology: Connecting Mind, Research and Everyday Experience, 3^rd Edition.  Wadsworth, Inc.